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Personal Growth

How to Set Financial Goals

Do you ever feel like you’re trying so hard, but you’re just not making progress with your money? Or like you’ve been working your butt off, but when you look around, you never have much to show for it?

Here’s the thing: If you don’t set goals for your money, you’ll probably keep feeling like all you’re doing is spinning those wheels. If you want to finally get moving, it’s time to make some financial goals.

What Are Financial Goals?

A financial goal is any plan you have for your money. You can have short-term and long-term goals. For example, saving up $1,000 is a short-term goal, while investing for retirement is a long-term financial goal. Your goals should give you focus and keep you accountable, no matter how long they take to make happen!

5 Steps to Setting Financial Goals

1. Write them down.

Something special happens when you put a pen to paper and write down your goals. You’re more likely to actually achieve them too.

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So, go ahead—make the commitment to yourself by putting them in writing. Then, stick them in your car, to your desk, or on your bathroom mirror. Type them in the Notes app on your phone, take a screenshot, and put it as your wallpaper so you see it all the time! Keeping your goals where you can see them will keep you focused.

2. Make them specific.

Don’t just say, “I want to be better with money.” That’s too vague. Narrow it down!

Let’s create an example here. What if you decide to tackle your debt—specifically. That’s one area of money to focus on. In the next two steps, you’ll break this down even more!

3. Make them measurable.

Okay, so you want to pay off debt. Now it’s time to pick an amount, something you can measure to know if you hit the goal or not. You look at your budget and your debt and decide you want to pay $15,000 toward your debt. That’s a measurable goal!

4. Give yourself a deadline.

Will you ever really reach your goals if they aren’t time-sensitive? Author Benny Lewis says, “There are seven days in a week, and ‘someday’ is not one of them.” Stop saying someday. You need to give yourself a deadline and make it reasonable—but also challenging!

Let’s look at our example again. When do you want to hit your goal? If you want to pay off $15,000 in one year, that means you have to pay $1,250 a month to do it. Is this possible but also a bit of a stretch? Good! 

Breaking your goals into bite-sized chunks will keep you motivated when you cross each tiny goal off your list, which then keeps you motivated to hit the big goal in the end!

5. Make sure they’re your own goals.

It’s easy to look around at what other people are doing and feel like you should be doing it too. But when we start comparing ourselves to other people, we’re playing a game we’ll never win.

When you’re setting financial goals, make sure it’s the best choice for you. In other words, just because all your friends are taking out second mortgages for renovated kitchens doesn’t mean you should. Put the blinders on, focus on your lane, and cross your own finish line.

5 Common Financial Goals

Okay, it can be hard to narrow down which financial goals are right for you. Where do you even start? Here are some common financial goals and tips on how to make them happen.

1. Create and stick to a budget.

Not only is budgeting one of the top financial goals people set each new year, but it’s also the foundation you should build all other money goals on.

That’s because a budget is a plan for what you’ll do with all your money. It’s a plan for what’s coming in (income) and what’s going out (expenses). When you do it every month, you’re giving your money purpose. You’re telling your money where to go so you don’t end up wondering where it went.

This is how you’ll gain momentum in every area of your finances. If you’re already budgeting, bravo! If not, get started with EveryDollar so you can knock out all your other money goals.

2. Build up an emergency fund.

Life happens. But you can be prepared for any money problems that come your way if you’ve got money saved up. We’re talking car trouble, medical expenses and busted toilets—you know, some of the worst parts of being an adult. But when you’ve got an emergency fund, you can rest well at night knowing you’re able to stand up against these moments.

Start with the financial goal of having $1,000 in savings. Then, if you have debt, pay it all off (that’s the next goal I’ll talk about). After that, build up a fully funded emergency fund with 3–6 months of expenses. (These are the first three Baby Steps—the proven plan I teach to help you take control of your money.)

When you’ve got an emergency fund, you’re ready for those “life happens” moments. Instead of being worried about what could happen next, you’ll be living in confidence.

3. Get out of debt.

If you’ve got debt, it’s time to get serious about paying it off. All of it. Listen, all debt does is hold you back. You can’t get ahead with your money if it’s always going towards paying off your past.

Remember: Every payment you make to debt could be cash you’re putting toward your other financial goals instead.

4. Save up for your retirement dreams.

Okay, think about those awesome retirement dreams you’ve got. Do you want to pack up the grandkids and head to Disney every Christmas? Visit a new state with your spouse once a quarter? Read every book on your shelves? Take up a dream hobby?

No matter what you’re dreaming of for the future, you’ll need good retirement investments now to make it happen. So, once you’re debt-free and have that fully funded emergency fund, I want you to start saving 15% of your household income for retirement.

5. Spend less and save more.

Tons of people throw out the goal of “I want to spend less” or “I want to save more” without thinking about what it means to actually do those things. You’ve got to get intentional about your money. Budget every month, find deals, use coupons, pay cash. Learn how to say no—even to yourself!

I’m not saying you’ll never have fun. But if you want to save money, you need to think way more about what you’re saying yes to with your money!

And finally, here’s one of my favorite tips for spending less and saving more: Start meal planning. Food is where most Americans overspend, and meal planning is how you rein that in! Check out my free Weekly Meal Planner and Grocery Guide to see how.

An Example of a Financial Goal in Action

Okay, let’s get really specific here with a story from my own life. A financial goal is what kept my spending tendencies (aka spendencies—trust me, it’s a thing) in check as my husband, Winston, and I built our house last year. Before that, any extra income we brought in went to general savings. Our investments were on track, and it was fun to see that money grow. But honestly, it was just there, doing its thing, and leaving me a bit uninspired in my financial goals.

But when we decided to build a house, I knew there’d be upcoming dollar amounts and deadlines to meet. And while saving up that much money seemed almost impossible, breaking it down into monthly goals gave us so much momentum. Having a plan for our money not only made our dream possible, but it also made the process fun!

Knowing my money was going toward something that I really wanted made all the difference. Suddenly I was motivated in a new way so I could hit that goal faster. And even though there were moments when we felt fatigued—I mean, there were some days when all I wanted to do was to relax and spend money—finding creative ways to work toward our goal was actually really fun.

Beyond that, it was character-building. It’s a time in our marriage that we’ll always be able to look back on and know we accomplished something hard together. It cultivated connection with each other and contentment in my own heart. Now that we’ve moved, I realize that those benefits of the process are worth more than the new house.

Why Is Setting Financial Goals Important?

Having a goal will change how you look at your money. You’ll start to see how every decision you make matters to your greater financial health.

For example, if you don’t have financial goals, it’s no big deal to buy Starbucks every day. But let’s look at just how much those lattes are really costing you. You’ll typically spend $25 for just one workweek of lattes—that’s $100 a month! What else could you do with that money?

If you put $100 in an investment account every month for five years, your latte fund could grow into more than $8,000 thanks to the power of compound interest. That’s a whole semester of your kids’ college you’re drinking!

Imagine if you looked even more long term and invested $100 a month for 15 years. Your latte savings could grow to over $45,000. That’s my dream car—a brand-new Tesla. (I mean, it’s the entry-level model, but still . . . it’s a Tesla.)

And if you invest your savings for 30 years? Your coffee money could grow to over $280,000. A latte a day or a quarter-million dollars? You guys, I like Starbucks, but not that much.

If you want to set yourself up to be financially secure, find small (or large) sacrifices you can make right now. The way you interact with your money today will impact your future.

Image showing how much lattes really cost you.

Goals Will Get You There

Financial goals will help you change your mindset, your habits and your life.

When you’re intentional with every dollar you have, every dollar will stretch further. That means you get to do more of the stuff you want to do and plan for the things you’ll do in the future.

If you want to do more than you ever thought possible, go on and set some goals. Decide what you want your future to look like, and figure out what you need to do today to make it happen.

You can live on your terms instead of the bank’s.

You can get out of debt once and for all.

You can build wealth and pay for things that matter to you.

Goals will get you there.

There are lots of things that influence the way you set your financial goals—your life growing up, your motivations and your own dreams for the future are just a few. I wrote my brand-new book, Know Yourself, Know Your Money, to help you understand why you handle money the way you do, and what to do about it, so you can reach your financial goals faster than ever before.

And remember, it all starts with a budget. This is the foundation. It’s the plan. And it’s how you get intentional with your money. Check out EveryDollar and start your free budget today. Then get moving on those five steps to setting and reaching your goals. No matter the time of the year, you can make these dreams into reality. Go get it! 

Rachel Cruze

About the author

Rachel Cruze

Rachel Cruze is a two-time #1 national bestselling author, financial expert and host of The Rachel Cruze Show. She has appeared on Good Morning America, Today and Live With Kelly & Ryan, among others. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people how to avoid debt, save money, budget and win with money at any stage in life. Learn More.

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